eco 201 exam 22

c

"Dumping" refers to buying goods at low prices in foreign countries and selling them at high prices in the United States. government actions to remedy "unfair" trade practices. the sale of goods abroad at a price below their cost and below the price charged in the domestic market. unloading of foreign goods on domestic docks.

b

"New industries need to be protected or they won't have the opportunity to grow up." This is a statement of the __________ argument for trade restrictions. anti-dumping infant-industry national-defense tariff none of the other choices

a

A tariff is a tax imposed on imported goods. legal limit on the amount of a good that can be imported. legal limit on the amount of a good that can be produced by foreign owners of a firm located in a host country. tax imposed on domestic producers of export goods.

a

A tariff on avocadoes ______________ the price of avocadoes, _____________ consumers' surplus for avocado buyers, _______________ producers' surplus of avocado growers and __________________ tariff revenue. Because the loss to _____________ is more than the gain to ___________________, there is a net loss to society. raises; decreases; increases; generates; consumers; producers and government raises; increases; decreases; does not generate; producers and government; consumers lowers; increases; decreases; does not generate; producers and government; consumers raises; increases; decreases; generates; producers; consumers and government

c

Arguments made against free trade include all of the following except dumping is an unfair trade practice that puts domestic producers of substitute goods at a disadvantage that they should be protected against. national defense considerations justify producing certain goods domestically whether the country has a comparative advantage in their production or not. free trade is inflationary and should be restricted in the domestic interest. if foreign governments subsidize their exports, foreign firms that export are given an unfair advantage that domestic producers should be protected against. infant industries should be protected from free trade so that they may have time to develop and compete on an even basis with older, more established foreign industries.

e

Countries tend to specialize in the production of goods in which they have a comparative advantage because government officials calculate opportunity costs and suggest to people what they ought to produce. none of the other choices the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce. the Economic Development Office of the United Nations hires economic experts to calculate the opportunity costs of different goods in different countries and then suggests to countries what they ought to produce. people want to make a profit.

a

Exhibit 34-1 Country A Country B Good X Good Y Good X Good Y 90 0 30 0 60 30 20 20 30 60 10 40 0 90 0 60 Refer to Exhibit 34-1. Country A is the lower opportunity cost producer of good X. good Y. goods X and Y. neither good X nor good Y.

b

Exhibit 34-1 Country A Country B Good X Good Y Good X Good Y 90 0 30 0 60 30 20 20 30 60 10 40 0 90 0 60 Refer to Exhibit 34-1. If the Country A is to specialize in the production of one of the two goods (and then trade that good with Country B), which good should it be and why? If Country B is to specialize in the production of one of the two goods (and then trade that good to with Country A), which good should it be and why? Good X for Country A because it is the higher opportunity cost producer of good X; good Y for Country B because it is the higher opportunity cost producer of good Y. Good X for Country A because it is the lower opportunity cost producer of good X; good Y for Country B because it is the lower opportunity cost producer of good Y. Good Y for Country A because it is the higher opportunity cost producer of good Y; good X for Country B because it is the higher opportunity cost producer of good X. Good Y for Country A because it is the lower opportunity cost producer of good Y; good X for Country B because it is the lower opportunity cost producer of good X.

e

International trade exists because countries want to be political allies. want to improve diplomatic relations with each other. want to be neighborly with each other. want to avoid war with each other. can make themselves better off through trade.

c

It is argued that certain industries should be protected from foreign competition because they are needed to secure the United States from foreign aggression. This argument is called the __________ argument. saving domestic-jobs low foreign wages national defense foreign export subsidies

b

On an aggregate or overall level, free trade produces a net __________ and restricted trade produces a net __________. loss; benefit benefit; loss benefit; benefit also loss; loss also

d

One country has a comparative advantage over another country in the production of a good if it has a curved production possibilities curve and the other country has a linear production possibilities curve. has lower fixed costs than the other country. has a linear production possibilities curve and the other country has a curved production possibilities curve. is a lower opportunity cost producer of the good.

b

Producers' surplus is the difference between the price __________ receive for a good and the __________ price for which they would have __________ the good. sellers; maximum; sold sellers; minimum; sold buyers; minimum; bought buyers; maximum; bought

d

Suppose that a tariff is imposed on imported cheese. This will have the effect of __________ the price of cheese, __________ consumers' surplus, and __________ producers' surplus. decreasing; decreasing; decreasing increasing; increasing; increasing increasing; increasing; decreasing increasing; decreasing; increasing decreasing; decreasing; increasing

a

Tariffs and quotas are often imposed when a government is more responsive to __________ interests, and the benefits of those trade restrictions are often __________. producer; concentrated producer; widely dispersed consumer; widely dispersed consumer; concentrated

d

The effects of tariffs and quotas are: a(n) __________ in the prices of imported goods to domestic consumers, and a(n) __________ in imports. decrease; increase increase; increase decrease; decrease increase; decrease